The Direct Taxes Code, 2012

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The Direct Taxes Code, 2012

National Board of Revenue

Rajaswa Bhaban

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34. Deduction for scientific research and development allowance .... 34 35. Computation of proft on transfer of a business capital asset .... 34 36. Special provisions relating to business reorganisation .... 35 37. Deduction for expenses incurred to earn business income .... 36 38. No deduction for expenses against public policy .... 38 39. No deductions until withholding obligations discharged .... 38

40. Recouped deductions .... 38

41. Limitations on specific expenses .... 39

42. Bad debts .... 39

Part F Capital gains

43. Net income from capital assets .... 41

44. Meaning of capital assets .... 41

45. Computation of capital gains .... 41

Part G

Income from other sources

46. Income from other sources .... 44

47. Deductions in computing income chargeable under the head income

from other sources .... 46

Chapter IV Methods of accounting

48. Method of accounting .... 47

49. Cash basis accounting .... 47

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51. Stock-in-trade .... 48

52. Long term contracts .... 49

53. Finance lease .... 49

54. Foreign currency debt gains and losses .... 50

Chapter V Losses

55. Set off losses .... 52

56. Carry forward of business losses .... 52

57. Set off of business loss consequent to amalgamation .... 53 58. Carry forward of speculation business losses .... 53

59. Carry forward of capital losses .... 53

60. Limitations on set off and carry forward of losses .... 54

Chapter VI

Payment of tax on income before assessment

61. General provisions for deduction at source and advance payment of

tax .... 55

62. Deduction at source from salaries .... 55 63. Deduction at source from interest or profit .... 56 64. Deduction at source from discount or interest of Bangladesh Bank bills

or securities .... 56

65. Deduction of tax from dividends .... 56

66. Collection of tax by registering or licensing authorities .... 57 67. Deduction or collection at source from payment to service providers .... 57 68. Collection of tax from stock exchange transactions .... 58 69. Deduction from payment to contractors etc. .... 59 70. Collection of tax from persons engaged in real estate or land

development business .... 60

71. Collection of tax from cigarette manufacturers .... 60 72. Deduction at source from house property .... 61 73. Collection of tax by Customs authority .... 61

74. Collection of tax from export .... 61

75. Deduction at source from compensation against acquisition of

property .... 62

76. Collection of tax on sale price of goods or property sold by public

auction .... 62

77. Deduction of tax from income derived on account of export of

manpower .... 62

78. Deduction of tax from commission or remuneration paid to agent of

foreign buyer .... 62

79. Deduction of tax from advertisement bill of newspaper or magazine

or private television channel .... 63

80. Deduction from income from lottery etc. .... 63 81. Deduction from income of non-residents .... 63 82. Consequences of failure to deduct etc. .... 63 83. Certificate of deduction etc., of tax. .... 64

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84. Payment to government of tax deducted .... 64 85. Unauthorised deduction prohibited .... 64 86. Power to levy tax without prejudice to other mode of recovery .... 64 87. Credit of tax deducted or collected at source .... 64 88. Payment of tax where no deduction is made .... 65 89.

90.

Return of tax collected or deducted

Advance payment of tax

.... 65 65

91. Instalment of advance tax .... 66

92. Computation of advance tax .... 66

93. Failure to pay instalment of advance tax .... 66 94. Levy of interest for failure to pay advance tax .... 67 95. Interest payable by the assessee on deficiency in payment of advance

tax .... 67

96. Payment of tax on the basis of return of income .... 67

Chapter VII

Return of income and assessment Part A

Return of income

97. Return of income .... 68

98. Notice for filing return of income .... 69 99. Filing of revised return of income .... 70

100. Self assessment tax on income .... 70

101. Acknowledgement of return of income .... 70

Part B

Assessment of income

102. Processing of return .... 70

103. Selection of return for scrutiny assessment .... 71

104. Scrutiny assessment .... 72

105. Assessment where no return is filed .... 73 106. Assessment in case of succession to business otherwise than on death .... 73 107. Assessment in case of discontinued business .... 74 108. Assessment in case of persons leaving Bangladesh .... 75 109. Assessment in case of income of a deceased person .... 75 110. Assessment in case of income escaping assessment, etc .... 76

111. Amendment of assessments .... 77

Part C

Liabilities in special cases

112. Non-resident ship owner or charterer .... 78 113. Non-resident aircraft owner or charterer .... 79 114. Assessment of persons about to leave Bangladesh .... 79

Chapter VIII Gift tax

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115. Charge of gift tax .... 81

116. Exemption in the case of certain type of gifts .... 81 117. Method for determination of the value of gift .... 81 118. Determination and collection of gift tax .... 82

119. Submitting return of gift tax .... 82

120. Late submission and revised return .... 82

121. Assessment of gift tax .... 82

122. Payment of gift tax .... 82

123. Penalty for default and concealment of facts regarding gift tax .... 83

124. Notice of demand for gift tax .... 83

125. Recovery of gift tax and penalty .... 83 126. Limitation of implementing certain laws .... 83

Chapter IX Property tax

127. Charge of property tax .... 84

128. Computation of net property .... 84

129. Net property to include certain assets .... 85

Chapter X Penalty

130. Penalty for failure to furnish a return or statement .... 87 131. Penalty for failure to display TIN or use fake TIN .... 87

132. Penalty for non-payment of tax .... 87

133. Penalty for failure to pay, deduct or collect tax, etc .... 87 134. Penalty for concealment of income .... 88 135. Penalty for failure to maintain records .... 89 136. Penalty for non-compliance with notice .... 89 137. Penalty for making false or misleading statements .... 89

138. Penalty for obstruction .... 89

139. Conditions for the imposition of penalty .... 89 140. Orders of Appellate Joint Commissioner of Taxes, etc., to be sent to

Deputy Commissioner of Taxes .... 89

141. Penalty to be without prejudice to other liability .... 89

Chapter XI

Appeal, revision and reference

142. Appeal against order of the Assessing Officer .... 91

143. Form of appeal and limitation .... 91

144. Procedure in appeal before the Appellate Joint Commissioner of Taxes or the Appellate Additional Commissioner of Taxes or the

Commissioner of Taxes (Appeals) .... 92

145. Decision in appeal by the Appellate Joint Commissioner of Taxes or the Appellate Additional Commissioner of Taxes or the

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146. Appeal to the Taxes Appellate Tribunal .... 94 147. Disposal of appeal by the Taxes Appellate Tribunal .... 94 148. Reference to the High Court Division .... 95 149. Decision of the High Court Division .... 96

150. Appeal to the Appellate Division .... 97

151. Revisional power of the Commissioner of Taxes .... 97

Chapter XII

Advance Rulings and Alternative Dispute Resolution Part-A

Advance Ruling

152. Scope of Advance Ruling .... 99

153. Authority for Advance Rulings .... 100

154. Procedure for advance ruling .... 100

155. Bar on proceedings in certain cases .... 101 156. Cases where Advance Ruling is applicable .... 101 157. Advance rulings to be void in certain cases .... 101

158. Powers of Authority .... 102

159. Procedure of the Authority .... 102

160. Definitions .... 102

Part-B

Alternative Dispute Resolution

161. Alternative Dispute Resolution .... 102

162. Commencement of ADR .... 102

163. Application for alternative resolution of disputes .... 102 164. Eligibility for application for ADR .... 103 165. Appointment of Facilitator and his duties and responsibilities .... 103 166. Rights and duties of the assessee for ADR .... 103 167. Nomination and responsibility of the Commissioner's Representative

in ADR .... 103

168. Procedures of disposal by the Alternative Dispute Resolution .... 103

169. Decision of the ADR .... 104

170. Effect of agreement .... 105

171. Limitation for appeal where agreement is not concluded .... 105 172. Post verification of the agreement .... 105

173. Bar on suit or prosecution .... 105

174. Definition .... 105

Chapter XIII Offences and prosecutions

175. Prosecution for non-compliance with certain statutory obligations .... 107 176. Prosecution for false statement in verification .... 107 177. Prosecution for failure to maintain records .... 107 178. Punishment for improper use of Taxpayer's Identification Number .... 107 179. Prosecution for making false or misleading statements .... 107

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180. Prosecution for obstructing an income tax authority .... 108 181. Prosecution for disposal of property to prevent attachment .... 108 182. Prosecution for unauthorised disclosure of information by a public

servant .... 108

183. Prosecution for abetment .... 108

184. Offences by companies and associations of persons .... 108 185. Institution of prosecution proceedings without prejudice to other

action .... 109

186. Sanction for prosecution .... 109

187. Power to compound offences .... 109

188. Trial by Special Judge .... 109

Chapter XIV Refunds

189. Entitlement to refund .... 110

190. Claim of refund for deceased or disabled persons .... 110 191. Correctness of assessment, etc., not to be questioned .... 110 192. Refund on the basis of orders in appeal .... 110

193. Form of claim and limitation .... 110

194. Interest on delayed refund .... 110

195. Adjustment of refund against tax .... 110

Chapter XV Recovery of tax

196. Tax to include penalty, interest, etc. .... 111

197. Notice of demand .... 111

198. Other modes of recovery .... 112

199. Recovery of tax through Collector of District .... 112 200. Collection of tax in the case of private companies and associations of

persons .... 113

201. Recovery of tax from persons holding money on behalf of a taxpayer .... 114

202. Recovery through liquidator .... 114

203. Recovery of tax due by non-resident member of an association of

persons .... 115

204. Initiation etc. of recovery proceedings .... 116

Chapter XVI

Avoidance of double taxation

205. Agreements for the avoidance of double taxation and prevention of

fiscal evasion .... 117

206. Foreign source salary of resident individuals .... 117

207. Foreign tax credit .... 117

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Section Title Page Chapter- XVII

Provisions relating to anti-avoidance of tax

209. Avoidance of tax through transactions with non-residents .... 119 210. Disallowance of expenditure incurred for payment to associates .... 119 211. Determination of income from international transaction having

regard to arm‘s length price .... 119

212. Determination of arm‘s length price .... 120 213. Avoidance of tax through transactions with non-residents .... 120 214. Avoidance of tax by sale and buy-back transaction in security .... 121 215. Avoidance of tax by buy and sale-back transaction in security .... 122 216. Broken-period income accruing from a debt instrument .... 122 217. General anti-avoidance provision .... 122

Chapter XVIII

Exemption and concessions regarding taxes on income

218. Exemptions from tax on income .... 125

219. Concessionary rate of tax on income .... 125

220. Rebate of tax on income .... 125

221. Exemptions and tax provisions in other laws .... 125

222. Limitation of exemption .... 125

Chapter XIX Management

Part A Tax administration

223. Direct tax authorities .... 127

224. Appointment and control of tax authorities .... 127

225. Power of higher authorities .... 128

226. Powers of the Board to issue instructions .... 128 227. Jurisdiction of direct tax authorities .... 128 228. Exercise of jurisdiction by successor .... 130 229. Guidance to the Deputy Commissioner of Taxes, etc. .... 130 230. Exercise of assessment functions by the Inspecting Joint

Commissioner of Taxes or the Inspecting Additional

Commissioner of Taxes .... 130

231. Powers regarding discovery and production of evidence .... 131 232. Powers to call for information and production of evidence .... 131 233. Power to inspect registers of companies .... 133 234. Power to verify deduction or collection of tax .... 133

235. Retention of seized assets .... 133

236. Handing over of seized assets .... 134

237. Retention and release of books of account or documents seized or

requisitioned assets .... 134

238. Power of survey .... 135

239. Confidentiality of information relating to seized assets .... 137

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241. Power of Inspecting Additional Commissioner of Taxes or Inspecting Joint Commissioner of Taxes to revise orders of Deputy

Commissioner of Taxes .... 138

242. Correction of errors .... 138

Part B

Taxes Appellate Tribunal

243. Appointment of Tribunal .... 140

244. Exercise of power of the Taxes Appellate Tribunal by Benches .... 140

245. Decision of Bench .... 140

246. Exercise of power by one member .... 131

247. Regulation of procedure .... 131

Chapter XX Miscellaneous

248. Statements, returns, etc. to be confidential .... 144 249. Taxpayer's identification number .... 144 250. Requirement of certificate in certain cases .... 144 251. Displaying of taxpayer‘s identification number certificate 156

252. Tax collection account number .... 157

253. Obligation to furnish annual information return .... 157

254. Service of notice .... 157

255. Notice deemed to be valid under certain conditions .... 159 256. Appearance by authorised representative .... 159 257. Tax to be calculated to nearest taka .... 160

258. Indemnity .... 160

259. Certain errors not to vitiate assessment etc. .... 160

260. Bar of suits in civil courts .... 160

261. Reward to officers and employees of the Board and its subordinate income tax officers for collection and detection of evasion of taxes ....

160 262. Assistance to income tax authorities .... 160

Chapter XXI Rules and repeal

263. Power to make rules .... 161

264. Repeal .... 162

265. Savings .... 162

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Schedule Title Page First Schedule Rates of tax on income

Part A General rate of tax on income .... 164

Part B Rate of tax on certain capital gains .... 164 Part C Rate of settled tax on income of certain categories of

business .... 165

Second Schedule Rates of gift and property tax

Part A Rate of gift tax .... 166

Part B Rate of property tax .... 166

Third Schedule Deduction or collection of tax at source

Part A Collection of tax from transfer of property .... 167 Part B Collection of tax from registration or renewal of fitness

of motor vehicle .... 167

Part C Collection of tax during transfer of ownership or renewal of survey certificate in case of inland water vessels ....

169 Part D Collection of tax during renewal of trade license .... 169 Part E Collection of tax during issuing permission for brick

field .... 170

Part F Collection of tax from supply of goods or execution of

contract or sub-contract for any work .... 170

Fourth Schedule Computation of profits and gains from the exploration and extraction of mineral deposits

Part A Computation of profits and gains from the exploration and production of petroleum and natural gas and

determination of the tax thereon .... 171 Part B Computation of profits and gains from the exploration

and extraction of mineral deposits (other than petroleum

and natural gas) in Bangladesh .... 173

Fifth Schedule Computation of the profits and gains of insurance business

Part A Life insurance .... 176

Part B General insurance .... 177

Sixth Schedule Depreciation and amortization

Part A Depreciation .... 179

Part B Balancing charge from the disposal of depreciable

property .... 181

Part C Amortisation of pre-commencement expenditure .... 181 Part D Amortisation of other intangible assets .... 182 Part E Balancing charge from the disposal of intangible asset .... 183

Seventh Schedule Provident fund, superannuation fund or pension fund and gratuity fund

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Part B Approved superannuation fund or pension fund .... 190

Part C Approved gratuity fund .... 194

Eighth Schedule Exclusion from total income

Part A Exclusion from total income for persons other than a

company .... 197

Part B Exclusion from total income for persons being a

company .... 201

Ninth Schedule Concessionary rate of tax .... 204

Tenth Schedule Tax rebate

Part A Items subject to tax rebate at specified rate .... 207 Part B Items subject to tax rebate at average rate .... 209

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Direct Taxes Code Bill, 2012

A Bill

to consolidate and amend the law relating to income tax, gift tax and property tax.

WHEREAS it is expedient to consolidate and amend the law relating to income tax, gift tax and property tax;

It is hereby enacted as follows:

Chapter I Preliminary 1. Short title, extent and commencement.-

(1) This code may be called the Direct Taxes Code , 2012. (2) It extends to the whole of Bangladesh.

(3) It shall come into force on the 1st day of July, 2012.

2. Definitions.-

In this Code , unless there is anything repugnant in the subject or context,—

(1) "accrual" in relation to expenditure, income, liability or receipt, with its grammatical variations, shall include expenditure, income, liability or receipt which has arisen; (2) "accumulated profits" in relation to dividend , includes—

(a) any reserve made up wholly or partly of any allowance, deduction or exemption admissible under this Code;

(b) as used in sub-clauses (a), (b) and (d) of clause (44), includes all profits of the company up to the date of such distribution; and

(c) as used in sub-clause (c) of clause (44), includes all profits of the company up to the date of its liquidation;

(3) ―advance ruling‖ shall have the meaning assigned to it in section 160;

(4) "advance tax" means the advance income tax payable in accordance with the section 90;

(5) "Additional Director General of Taxes" means a person appointed to be an Additional Director General of Taxes under section 223;

(6) ―agricultural income‖ means as agricultural income as defined in section 23; (7) ―agricultural land‖ means any land situated in Bangladesh which is used for

agricultural purposes and—

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(b) is subject to a local rate assessed and collected by officers of the Government as such;

(8) ―amalgamation‖, in relation to companies, means the merger of one or more companies with another company, or the merger of two or more companies to form one company , if-

(a) all the property of the amalgamating company or companies immediately before the merger, becomes the property of the amalgamated company; (b) all the liabilities of the amalgamating company or companies immediately

before the merger, become the liabilities of the amalgamated company; and (c) the shareholders holding not less than nine-tenths in value of the shares in

the amalgamating company or companies (other than shares already held therein immediately before the merger by, or by a nominee for, the amalgamated company or its subsidiary) become shareholders of the amalgamated company;

(9) "amalgamated company" means-

(a) a company which amalgamating company or companies merge; or

(b) a company formed as a result of merger of two or more amalgamating companies;

(10) "amalgamating company" means a company which - (a) merges with another company, or

(b) merges with another company to form a new company;

(11) ―annual value‖ in relation to any property let out, shall be deemed to be—

(a) the sum for which property might reasonably be expected to let from year to year and any amount received by letting out furniture, fixture, fittings etc appurtenant thereto ; or

(b) where the annual rent in respect thereof is in excess of the sum referred to in sub- clause (a), the amount of the annual rent;

(12) ―Appellate Additional Commissioner of Taxes‖ means a person -

(a) appointed to be an Appellate Additional Commissioner of Taxes under section 223; and

(b) appointed to hold current charge of an Appellate Additional Commissioner of Taxes;

(13) ―Appellate Joint Commissioner of Taxes‖ means a person -

(a) appointed to be an Appellate Joint Commissioner of Taxes under section 223; and

(b) appointed to hold current charge of an Appellate Joint Commissioner of Taxes;

(15)

(14) ―Approved gratuity fund‖ means a gratuity fund which has been and continues to be approved by the Board in accordance with the provisions of Part C of the Seventh Schedule;

(15) ―Approved superannuation fund or Pension Fund" means a superannuation fund which has been and continues to be approved by the Board in accordance with the provisions of Part B of the Seventh Schedule;

(16) ―assessee‖, means a person-

by whom any tax or other sum of money is payable under this Code, and includes—

(a) who is required to file a return of income under this Code;

(b) who desires to be assessed and submits his return of income under this Code; (c) in respect of whom any proceeding under this Code has been initiated; (d) who is deemed to be a person under this Code;

(e) by whom any tax, or any other sum of money, is payable under this Code; (f) to whom any amount of refund is payable under this Code; or

(g) who is a person in default; (17) "assessee in default" means-

(a) a person who has failed to fulfill his obligation under this Code or has failed to make payment of any amount due from him; or

(b) a person who is deemed to be person in default under any provision of this Code;

(18) "Assessing Officer" means the Extra Assistant Commissioner of Taxes, Assistant Commissioner of Taxes, Deputy Commissioner of Taxes, Joint Commissioner of Taxes and Additional Commissioner of Taxes who is vested with the relevant jurisdiction;

(19) ―assessment‖, with its grammatical variations and cognate expressions, includes re-assessment and amended or further assessment;

(20) ―assessment‖ includes— (a) reassessment;

(b) any order giving effect to the directions of an Appellate Authority; (c) any order under section 149 or section 150; and

(d) any order under section 242 rectifying any mistake apparent on the face of the record with reference to sub-clause (a) or sub-clause (b) or sub-clause (c);

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(21) ―Assistant Commissioner of Taxes ‖ means a person appointed to be an Assistant Commissioner of Taxes under section 223;

(22) ―Assistant Director General of Taxes‖ means a person appointed to be an Assistant Director General of Taxes under section 223;

(23) ―Bangladeshi company‖ means a company formed and registered under the Companies Act, 1913 (VII of 1913) or †Kv¤cvbx AvBb, 1994 (1994 m‡bi 18 bs AvBb), and includes a body corporate established or constituted by or under any law for the time being in force in Bangladesh having in either case its registered office in Bangladesh;

(24) ―Banking company‖ has the same meaning as in e¨vsK †Kv¤cvbx AvBb, 1991 (1991 m‡bi 14 bs AvBb), and includes any body corporate established or constituted by or under any law for the time being in force which transacts the business of banking in Bangladesh;

(25) ―Board‖ means the National Board of Revenue constituted under the National Board of Revenue Order, 1972 (P.O. No. 76 of 1972);

(26) ―books‖ or ―books of account‖ includes journals, ledgers, day-books, cash books, account books, stock register and other books, kept-

(a) in the written form;

(b) as data stored in a disc, floppy, or flash drive, tape or any other form of electro-magnetic data storage device; or

(c) as print outs or image of the data stored in any of the form referred to in clause (b);

(27) ―business‖ means business as defined in section 27;

(28) "business connection" in relation to a non-resident shall include any business activity carried out through a person who, acting on behalf of the non resident,- (a) has an authority to conclude a contract on behalf of the non-resident in

Bangladesh, and habitually exercises it , unless his activities are limited to purchase of goods or merchandise for the non-resident;

(b) has no such authority, but habitually maintains in Bangladesh a stock of goods or merchandise from which he regularly delivers them on behalf of the non-resident; or

(c) habitually secures orders in Bangladesh, mainly or wholly for the non-resident or for that non-non-resident and its associated enterprise;

(29) ―capital asset‖ means capital asset as defined in section 44;

(30) ―charitable purpose‖ includes relief of the poor, education, medical relief and the advancement of any object of general public utility;

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(31) ―chartered accountant‖ means a chartered accountant as defined in the Bangladesh Chartered Accountants Order, 1973 (P.O. No. 2 of 1973);

(32) ―child‖, in relation to any individual, includes a step-child and an adopted child of that individual;

(33) ―Commissioner of Taxes‖ means a person appointed to- (a) be a Commissioner of Taxes under section 223; or

(b) hold current charge of a Commissioner of Taxes ;

(34) ―Commissioner of Taxes (Appeals)‖ means a person appointed to- (a) be a Commissioner of Taxes (Appeals) under section 223; or (b) hold current charge of a Commissioner of Taxes (Appeals); (35) ―company‖ means—

(a) a company as defined in the Companies Act, 1913 (VII of 1913) or †Kv¤• vbxAvBb, 1994 (1994 m‡bi 18 bs AvBb); or

(b) a body corporate established or constituted by or under any law for the time being in force; or

(c) any nationalised banking or other financial institution, insurance body and industrial or business enterprise; or

(d) an association or combination of persons, called by whatever name, if any of such persons is a company as defined in the Companies Act, 1913 (VII of 1913) or †Kv¤• vbxAvBb, 1994 (1994 m‡bi 18 bs AvBb); or

(e) any association or body incorporated by or under the laws of a country outside Bangladesh; or

(f) any foreign association or body, not incorporated by or under any law, which the Board may, by general or special order, declare to be a company for the purposes of this Code;

(36) ―co-operative society‖ means a co-operative society registered under the Co-operative Societies Act, 1940 (Beng. Act XXI of 1940), or mgevq mwgwZ AvBb, 2001 (2001 m‡bi 47 bs AvBb) or under any other law for the time being in force governing the registration of co-operative societies;

(37) ―cost and management accountant‖ means a cost and management accountant as defined in the Cost and Management Accountants Act, 1977 (LIII of 1977); (38) ―deduction of tax at source‖ or ―collection of tax at source‖ means deduction or

collection of tax under Chapter VI of this Code, with all their grammatical variations;

(18)

(39) ―deductor‖ or ―collector‖ means a person responsible for making any payment in respect of which he is liable to deduct or collect tax source under Chapter VI of this Code;

(40) ―Deputy Commissioner of Taxes‖ means a person appointed to be a Deputy Commissioner of Taxes under section 223, and includes-

(a) an Assistant Commissioner of Taxes; or (b) an Extra Assistant Commissioner of Taxes;

(41) ―Deputy Director General of Taxes‖ means a person appointed to be a Deputy Director General of Taxes under section 223;

(42) ―director‖ and ―manager‖ in relation to a company have the meanings assigned to them in the Companies Act, 1913 (VII of 1913) or †Kv¤• vbxAvBb, 1994 (1994 m‡bi 18 bs AvBb);

(43) ―Director General of Taxes‖ means a person appointed to be a Director General of Taxes under section 223;

(44) ―dividend‖ includes—

(a) any distribution by a company of accumulated profits, whether capitalised or not, if such distribution entails the release by the company to its shareholders of all or any part of its assets or reserves;

(b) any distribution by a company, to the extent to which the company possesses accumulated profits, whether capitalized or not, to its shareholders of debentures, debenture-stock or deposit certificates in any form, whether with or without interest;

(c) any distribution made to the shareholders of a company on its liquidation to the extent to which the distribution is attributable to the accumulated profits of the company immediately before its liquidation, whether capitalized or not;

(d) any distribution by a company to its shareholders on the reduction of its capital, to the extent to which the company possesses accumulated profits, whether such accumulated profits have been capitalized or not;

(e) any profit remitted outside Bangladesh by a company not incorporated in Bangladesh under ‡Kv¤cvbx AvBb, 1994 (1994 m‡bi 18 bs AvBb);

(f) any payment by a private company of any sum (whether as representing a part of the assets of the company or otherwise) by way of advance or loan to a shareholder or any payment by any such company on behalf, or for the individual benefit, of any such shareholder, to the extent to which the company, in either case, possesses accumulated profit; but does not include—

(i) a distribution made in accordance with sub-clause (c) or sub-clause (d) in respect of any share including preference share for full cash

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consideration, or redemption of debentures or debenture-stock, where the holder of the share or debenture is not entitled in the event of liquidation to participate in the surplus assets;

(ii) any advance or loan made to a shareholder in the ordinary course of its business, where the lending of money is a substantial part of the business of the company;

(iii) any dividend paid by a company which is set off by the company against the whole or any part of any sum previously paid by it and treated as dividend within the meaning of sub-clause (e) to the extent to which it is so set off;

(iv) any bonus share issued by a company;

(45) ―employer‖ means any person who engages an employee and is obliged to pay compensation to him, and also includes a former employer;

(46) ―employee‖ means any individual engaged in employment; (47) ―employment‖ includes-

(a) a directorship or any other office involved in the management of the company; or

(b) a position entitling the holder to a fixed or ascertainable remuneration; or (c) the holding or acting in any public office;

(48) ―Extra Assistant Commissioner of Taxes‖ means a person appointed to - (a) be an Extra Assistant Commissioner of Taxes under section 223; or (b) hold current charge of an Extra Assistant Commissioner of Taxes; (49) ―fair value‖ means, in relation to capital asset—

(a) the price which such asset would ordinarily fetch on sale in the open market on the relevant day; or

(b) where the price referred to sub-clause (a) is not ascertainable, the price which the Deputy Commissioner of Taxes may, with the approval in writing of the Inspecting Joint Commissioner of Taxes, determine; or

(c) the residual value received from the lessee in case of an asset leased by a financial institution having license from the Bangladesh Bank on termination of lease agreement on maturity or otherwise subject to the condition that such residual value plus amount realised during the currency of the lease agreement towards the cost of the asset is not less than the cost of acquisition to the lessor financial institution;

(50) ―financial institution‖ means any financial institution as defined in ―Avw_©K cÖwZôvb AvBb, 1993‖ (1993 m‡bi 27 bs AvBb);

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(51) ―firm‖ has the same meaning as assigned to it in the Partnership Act, 1932 (IX of 1932);

(52) ―foreign company‖ means a company which is not a Bangladeshi company; (53) ‗gift‘ means wilful transfer of movable or immovable property by one person to

another without receiving any money or equivalence to monetary value of the property so transferred;

(54) ―income‖ includes—

(a) any amount chargeable to tax under this Code;

(b) any amount subject to collection or deduction of tax at source under this Code;

(c) any loss of such income; but does not include bonus share;

(55) ―Inspecting Additional Commissioner of Taxes‖ means-

(a) a person appointed to be an Inspecting Additional Commissioner of Taxes under section 223;

(b) a person appointed to hold current charge of an Inspecting Additional Commissioner of Taxes;

(56) ―Inspecting Joint Commissioner of Taxes‖ means-

(a) a person appointed to be an Inspecting Joint Commissioner of Taxes under section 223;

(b) a person appointed to hold current charge of an Inspecting Joint Commissioner of Taxes;

(57) ―Inspector of Taxes‖ means -

(a) a person appointed to be an Inspector of Taxes under section 223; (b) a person appointed to hold current charge of an Inspector of Taxes; (58) ―interest‖ means -

(a) any amount payable to any person, in any manner, in respect of any money borrowed or debt incurred;

(b) any service fee or other charge in respect of the money borrowed or debt incurred or in respect of any credit facility which has not been utilised; (c) any amount payable to any person against a deposit, claim or other similar

right or obligation;

(59) ―Joint Director General of Taxes‖ means a person appointed by a Joint Director General of Taxes under section 223;

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(60) ―legal representative‖ has the same meaning as assigned to it in section 2(11) of the Code of Civil Procedure, 1908 (Act V of 1908);

(61) ―local authority‖ means as local authority as defined in The General Clauses Act, 1897 (Act no. X of 1897);

(62) ―money borrowed‖ includes, in the case of a banking company, money received by way of deposit;

(63) ―non-filer‖ in relation to a tax year means a person who has not furnished,- (a) a return of income for the tax year; and

(b) a return of income for the two immediate preceding tax years; (64) ―non-resident‖ means a person who is not a resident;

(65) ―partner‖ has the same meaning as assigned to it in the Partnership Act, 1932 (IX of 1932), and includes a person who, being a minor, has been admitted to the benefits of partnership;

(66) ―partnership‖ has the same meaning as assigned to it in the Partnership Act, 1932 (IX of 1932);

(67) ―perquisite‖ means, for the purpose of employee —

(i) any payment made to an employee by an employer in the form of cash or in any other form excluding basic salary, festival bonus, incentive bonus, arrear salary, advance salary, leave encashment or leave fare assistance in cash or kind and overtime, and

(ii) any benefit including fringe benefits, whether convertible into money or not, provided to an employee by an employer, called by whatever name, other than contribution to a recognised provident fund, approved pension fund, approved gratuity fund and approved superannuation fund ;

(68) ―person‖ includes- (a) a company; (b) a firm;

(c) a local authority;

(d) an association of persons; (e) an individual; and

(f) every other artificial juridical person;

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(70) ―principal officer‖, used with reference to a local authority, a company, any other public body or any association of persons, includes—

(a) managing director, manager, secretary, treasurer, agent or accountant (by whatever designation known), or any officer responsible for management of the affairs, or of the accounts, of the authority, company, body or association; and

(b) any person connected with the management or the administration of the local authority, company, body or association upon whom the Deputy Commissioner of Taxes has served a notice of his intention to treat him as principal officer thereof ;

(71) ―profession‖ includes a vocation;

(72) ―public servant‖ has the same meaning as in section 21 of the Penal Code (Act XLV 1860);

(73) ―recognised provident fund‖ means a provident fund which has been, and continues to be, recognised by the Commissioner of Taxes in accordance with the provisions of Part A of the Seventh Schedule;

(74) ―relative‖, in relation to an individual, means the husband, wife, brother, sister or any lineal ascendant or descendant of that individual;

(75) ―resident‖, in respect of any tax year, means—

(a) an individual who has been in Bangladesh—

(i) for a period of, or for periods amounting in all to, one hundred and eighty-two days or more in that year; or

(ii) for a period of, or periods amounting in all to, ninety days or more in that year having previously been in Bangladesh for a period of, or periods amounting in all to, three hundred and sixty-five days or more during four years preceding that year;

(b) an individual who is a citizen of Bangladesh and employee or official of the government of Bangladesh;

(c) a firm or other association of persons, the control and management of whose affairs is situated wholly or partly in Bangladesh in that year; and

(d) a company is resident in Bangladesh if it –

(i) is incorporated under the laws of Bangladesh; or

(ii) has its centre of control and management in Bangladesh at any time in the tax year.

(76) ―royalty‖ means consideration (including any lump sum consideration but excluding any consideration which is classifiable as income of the recipient under the head ―Capital gains‖) for—

(a) transfer of all or any rights, including the granting of a licence in respect of a patent, invention, model, design, secret process or formula, or trade mark or similar property;

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(b) the imparting of any information concerning the working of, or the use of, a patent, invention, model, design, secret process or formula, or trade mark or similar property;

(c) the use of any patent, invention, model, design, secret process or formula, or trade mark or similar property;

(d) the imparting of any information concerning technical, industrial, commercial, or scientific knowledge, experience or skill;

(e) the use or right to use of transmission by satellite cable, optic fibre or similar technology;

(f) the transfer of all or any rights, including granting of a licence, in respect of- (i) any copyright, literary, artistic or scientific work; or

(ii) cinematographic films or work on films, tapes or any other means of reproduction of cinematograph films but does not include any consideration for its sale, distribution or exhibition;

(iii) live coverage of any event;

(g) the rendering of any services in connection with any of the aforesaid activities;

(77) ―rules‖ means rules made under this Code; (78) ―salary‖ means salary as defined in section 16;

(79) ―scheduled bank‖ has the same meaning as in the Bangladesh Bank Order, 1972 (P.O. No. 127 of 1972);

(80) ―security‖ means security as defined in The Securities Act, 1920 (Act No. X of 1920);

(81) ―shareholder‖ includes a preference shareholder;

(82) ―stop-filer‖ in relation to a tax year means a person who has not furnished a return of income for the tax year but has-

(a) furnished a return of income for the immediately preceding tax year; or (b) being assessed of the immediately preceding tax year; or

(c) not furnished a return of income in response to a notice served under 95 for the immediately preceding tax year;

(83) ―tax‖ means the income tax payable under this Code and includes any additional tax, penalty, interest, fee or other charges leviable or payable under this Code;

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(84) ―Taxes Appellate Tribunal‖ means the Taxes Appellate Tribunal established under section 243;

(85) ―tax year‖ or "year" means—

(a) the period beginning with the date of setting up of a business and ending with the 30th day of June following the date of setting up of such business;

(b) the period beginning with the date on which a source of income newly comes into existence and ending with the 30th day of June following the date on which such new source comes into existence;

(c) in the case of discontinuance of the business or dissolution of the unincorporated body or liquidation of the company, as the case may be, the period beginning with 1st day of July prior to such discontinuance or dissolution or liquidation and ending with the date of such discontinuance or dissolution or liquidation;

(d) the period beginning with the 1st day of the July and ending with the date of retirement or death of a participant of the unincorporated body;

(e) the period immediately following the date of retirement, or death, of a participant of the unincorporated body and ending with the date of retirement, or death, of another participant or the 30th day of June following the date of the retirement, or death, as the case may be; or (f) the period of twelve months commencing from the 1st day of July of the

relevant year in any other case;

(86) ―total income‖ means the total income of a person for a tax year shall be the sum of the person's income under each of the heads of income for the year;

(87) ―transfer‖, in relation to a capital asset, includes the sale, exchange or relinquishment of the asset, or the extinguishments or compulsory acquisition of any right therein, but does not include—

(a) any transfer of the capital asset under a gift, bequest, will or an irrevocable trust;

(b) any distribution of the assets of a company to its shareholders on its liquidation; and

(c) any distribution of capital assets on the dissolution of a firm or other association of persons;

(88) "trust" means trust as defined in Trust Act, 1882 (11 of 1882);. (89) ―written down value‖ means-

(a) where the assets were acquired in the tax year, the actual cost thereof to the person;

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(b) where the assets were acquired before the tax year, the actual cost thereof to the person as reduced by the aggregate of the allowances for depreciation allowed under this Code, or the Income Tax Ordinance, 1984 (Ord. No. XXXVI of 1984), in respect of the assessments for earlier year or years.

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Chapter II Basis of charge 3. Liability to pay, and charge of, income-tax.-

(1) In accordance with the provisions of this Code, every person shall be liable to pay income-tax in respect of his total income of the tax year.

(2) Subject to the provisions of this Code, tax, including additional income-tax as described in section 4 and surcharge under section 5 shall be charged in respect of the total income of a tax year of every person.

(3) Where the income tax referred to in sub-section (2) is to be charged in respect of the income of a period other than the tax year, the income-tax for such period shall be charged accordingly.

(4) The income-tax referred to in sub-section (2) shall be charged at the rate specified in the First Schedule in the manner provided therein.

(5) In respect of the income chargeable under sub-section (2), income tax shall be deducted or collected at source or paid in advance, in accordance with the provisions of this Code.

(6) The chargeability of income-tax on the income of a tax year under the foregoing provisions shall be determined in accordance with the provisions of this Code.

4. Charge of additional tax.-

Notwithstanding anything contained in any other provisions of this Code or any other law for the time being in force, in addition to tax payable under section 3, the following additional tax shall be charged:

(a) at the rate of five per cent on the aggregate sum of accumulated profit and free reserve, where a public limited company, not being a banking or insurance company, listed with any stock exchange in Bangladesh, has not issued, declared or distributed dividend or bonus share equivalent to at least fifteen percent of its paid up capital to its share holders within a period of six months immediately following any tax year; and

(b) at the rate of fifteen per cent on so much of profit as it exceeds fifty per cent of the aggregate sum of the capital and reserve, where a banking company operating under e¨vsK †Kv¤• vbxAvBb, 1991 (1991 mv‡ji 14bs AvBb) shows profit in its return of income for a tax year at an amount exceeding fifty per cent of its capital as defined under the said Act together with reserve; and

(c) at the rate of three per cent on the difference between the value at which a share of a company is sold and its face value, where the company raises its share capital through book building or public offering or rights offering or placement or preference share or in any other way at a value in excess of face value of the share.

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5. Charge of surcharge.-

(1) A surcharge on income shall be charged for any tax year at any rate or rates as specified in First Schedule;

(2) All the provisions of this Code relating to charge, assessment, deduction at source, payment in advance, collection, recovery and refund of income tax shall, so far as may be, apply to the charge, assessment, deduction at source, payment in advance, collection, recovery and refund of the surcharge.

6. Scope of total income.-

(1) Subject to the provisions of this Code, the total income of any tax year of a person, who is a resident, shall include all income from whatever source derived which—

(a) accrues, or is deemed to accrue, to him in Bangladesh during the year; (b) accrues to him outside Bangladesh during the year;

(c) is received, or is deemed to be received, by him, or on his behalf, in Bangladesh during the year; or

(d) is received by him, or on his behalf, outside Bangladesh during the year. (2) Subject to the provisions of this Code, the total income of any tax year of a

person, who is a non-resident, shall include all income from whatever source derived which—

(a) accrues, or is deemed to accrue, to him in Bangladesh during the year; or (b) is received, or is deemed to be received, by him, or on his behalf, in

Bangladesh during the year.

(3) Any income which accrues to a resident outside Bangladesh during the year, or is received outside Bangladesh during the year by, or on behalf of, such resident, shall be included in the total income of the resident, whether or not such income has been charged to tax outside Bangladesh.

7. Resident in Bangladesh.-

(1) An individual shall be resident in Bangladesh in any tax year, if he is in Bangladesh—

(a) for a period, or periods, amounting in all to one hundred and eighty-two days or more in that year; or

(b) for a period, or periods, amounting in all to— (i) ninety days or more in that year; and

(ii) three hundred and sixty-five days or more within the four years immediately preceding that year.

(2) The provisions of clause (b) of sub-section (1) shall not apply in respect of an individual who is—

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(a) a citizen of Bangladesh and who leaves Bangladesh in that year as a member of the crew of an Bangladeshi ship; or

(b) a citizen of Bangladesh and who leaves Bangladesh in that year for the purposes of employment outside Bangladesh.

(3) A company shall be resident in Bangladesh in any tax year, if— (a) it is a Bangladeshi company; or

(b) its place of effective management, at any time in the year, is in Bangladesh. (4) Every other person shall be resident in Bangladesh in any tax year, if the place of

control and management of its affairs, at any time in the year, is situated wholly, or partly, in Bangladesh.

8. Income deemed to accrue in Bangladesh.-

(1) The income shall be deemed to accrue in Bangladesh, if it accrues, whether directly or indirectly, through or from:

(a) any business connection in Bangladesh; (b) any property in Bangladesh;

(c) any asset or source of income in Bangladesh; or (d) the transfer of a capital asset situated in Bangladesh.

(2) Without prejudice to the generality of the provisions of sub-section (1), the following income shall be deemed to accrue in Bangladesh, namely:—

(a) income from employment, if it is for– (i) service rendered in Bangladesh;

(ii) service rendered outside Bangladesh by a citizen of Bangladesh and the income is receivable from the Government; or

(iii) the rest period, or leave period, which precedes, or succeeds, the period of service rendered in Bangladesh and forms part of the service contract of employment;

(b) any dividend paid by a domestic company outside Bangladesh;

(c) any insurance premium including re-insurance premium accrued from or payable by any resident or non-resident in respect of insurance covering any risk in Bangladesh;

(d) interest accrued from or payable by any resident or the Government;

(e) interest accrued from or payable by any non-resident, if the interest is in respect of any debt incurred and used for the purposes of—

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(ii) earning any income from any source in Bangladesh;

(f) royalty accrued from or payable by any resident or the Government;

(g) royalty accrued from or payable by a non-resident, if the royalty is for the purposes of—

(i) a business carried on by the non-resident in Bangladesh; or (ii) earning any income from any source in Bangladesh;

(h) fees for technical services accrued from or payable by any resident or the Government;

(i) fees for technical services accrued from or payable by any non-resident, in respect of services utilised for the purposes of—

(i) a business carried on by the non-resident in Bangladesh; or (ii) earning any income from any source in Bangladesh;

(j) transportation charges accrued from or payable by any resident or the Government;

(k) transportation charges accrued from or payable by any non-resident, if the transportation charges are in respect of the carriage to, or from, a place in Bangladesh.

(3) For the purposes of clause (a) of sub-section (1), in the case of a business of which all the operations are not carried out in Bangladesh, the income of the business deemed to accrue in Bangladesh shall be only such part of the income as is reasonably attributable to the operations carried out in Bangladesh.

(4) The income deemed to accrue in Bangladesh under sub-section (1) shall, in the case of a non-resident, not include the following, namely:—

(a) any income accruing through, or from, operations which are confined to the purchase of goods in Bangladesh for the purposes of export out of Bangladesh;

(b) interest accrued from or payable by a resident, in respect of any debt incurred and used for the purposes of—

(i) a business carried on by the resident outside Bangladesh; or (ii) earning any income from any source outside Bangladesh; (c) royalty accrued from or payable by a resident for the purposes of—

(i) a business carried on by the resident outside Bangladesh; or (ii) earning any income from any source outside Bangladesh;

(d) fees for technical services accrued from or payable by a resident, in respect of services utilised for the purposes of—

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(i) a business carried on by the resident outside Bangladesh; or (ii) earning any income from any source outside Bangladesh;

(e) transportation charges for the carriage by aircraft or ship accrued from or payable by any resident, if the transportation charges are in respect of the carriage from a place outside Bangladesh to another place outside Bangladesh, except where the airport or port of origin of departure of such carriage is in Bangladesh;

(g) income from transfer, outside Bangladesh, of any share or interest in a foreign company unless at any time in twelve months preceding the transfer, the fair value of the assets in Bangladesh, owned, directly or indirectly, by the company, represent at least fifty per cent. of the fair value of all assets owned by the company;

(h) interest accrued from or payable by a non-resident as referred to in sub-clause (ii) of sub-clause (e) of sub-section (2), if such interest has not been claimed by the non-resident as a deduction from his tax bases chargeable in Bangladesh.

(5) The provisions of clauses (c) to (k) of sub-section (2) shall be applicable, whether or not,—

(a) the payment is made in Bangladesh; (b) the services are rendered in Bangladesh;

(c) the non-resident has a residence or place of business or any business connection in Bangladesh; or

(d) the income has accrued in Bangladesh.

(6) Where the income of a non-resident, in respect of transfer, outside Bangladesh, of any share or interest in a foreign company, is deemed to accrue in Bangladesh under clause (d) of sub-section (1), it shall be computed in accordance with the following formula—

A x B/C

Where-

A = Income from the transfer computed in accordance with provisions of this Code as if the transfer was effected in Bangladesh;

B = fair value of the assets in Bangladesh, owned, directly or indirectly, by the company;

C = fair value of all assets owned by the company.

9. Income deemed to be received in a tax year.-

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(a) any contribution made by an employer, in the tax year, to the account of an employee under a pension fund;

(b) any contribution made by an employer, in the tax year, to the account of an employee in any other fund;

(c) the annual accretion, in the tax year, to the balance at the credit of any employee in a fund referred to in clause (b) to the extent it exceeds the limit as may be prescribed.

10. Dividend income.-

For the purposes of inclusion in the total income of an assessee—

(a) any dividend declared, distributed or paid by a company within the meaning of sub-clauses (a) or (b) or (c) or (d) or (e) of clause (44) of section 2 shall be deemed to be the income of the tax year in which it is so declared, distributed or paid, as the case may be;

(b) any interim dividend shall be deemed to be the income of the tax year in which the amount of such dividend is unconditionally made available by the company to the member who is entitled to it.

11. Total income to include income of any other person.-

(1) The total income of any person, being a transferor, shall include the following, namely:-

(a) any income accruing to any other person, by virtue of a transfer, whether revocable or not, without transfer of the asset from which the income accrues; or

(b) any income accruing to any other person, by virtue of a revocable transfer of an asset.

(2) The provisions of clause (b) of sub-section (1) shall not apply in a case where- (a) any income accrues from an asset transferred to any trust, if the transfer is

not revocable during the life time of the beneficiary of the trust; or

(b) any income accrues from an asset transferred to any other person, not being a trust, if the transfer is not revocable during the lifetime of such other person.

(3) In this section,—

(a) a transfer shall be deemed to be revocable if—

(i) it contains any provision for the re-transfer, directly or indirectly, of the whole or any part of the income or assets to the transferor; or (ii) it, in any way, gives the transferor a right to re-assume power, directly

or indirectly, over the whole or any part of the income or assets; (b) a transfer shall include any settlement, trust, covenant, agreement or

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12. Income of individual to include income of spouse, minor child and others.- (1) The total income of any individual shall include—

(a) all income which accrues, directly or indirectly,—

(i) to the spouse, by way of salary, commission, fees or any other form of remuneration, whether in cash or in kind, from a concern in which the individual has a substantial interest;

(ii) from assets transferred, directly or indirectly, to the spouse by the individual, otherwise than for adequate consideration, or in connection with an agreement to live apart;

(iii) from assets transferred, directly or indirectly, to the son‘s wife by the individual, otherwise than for adequate consideration; or

(iv) from assets transferred, directly or indirectly, to any other person by the individual otherwise than for adequate consideration, to the extent to which the income from such assets is for the immediate or deferred benefit of the spouse or son‘s wife;

(b) all income which accrues to a minor child (other than a minor child being a person with disability or person with severe disability) of the individual, other than income which accrues to the child on account of any—

(i) manual work done by the child; or

(ii) activity involving application of the skill, talent or specialised knowledge and experience of the child;

(c) all income derived from any converted property or part thereof;

(d) all income derived from any converted property which is received by the spouse or minor child upon partition of the Hindu undivided family of which the individual is a member.

(2) Subject to sub-section (3) and without prejudice to sub-section (1), where the assessee is a partner of a firm, then, whether the firm has made a profit or a loss, his share (whether a net profit or a net loss) shall be taken to be any salary, interest, commission or other remuneration payable to him by the firm in respect of the tax year increased or decreased respectively by his share in the balance of the profit or loss of the firm after the deduction of any interest, salary, commission or other remuneration payable to any partner in respect of the income and such share shall be included in his total income:

(3) If the share of income so computed under sub-section (2) is a loss, such loss may be set off or carried forward and set off in accordance with the provisions of Chapter V.

(4) The provisions of sub-clause (i) of clause (a) of sub-section (1) shall not apply in relation to any income accruing to the spouse where the spouse possesses technical or professional qualifications and the income is solely attributable to the

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application of the technical or professional knowledge and experience of the spouse.

(5) The income referred to in sub-clause (i) of clause (a) of sub-section (1) shall, notwithstanding anything contained therein, be included in the total income of the spouse whose total income (excluding the income referred to in that sub-clause) is higher.

(6) The Board may prescribe the method for determining the income referred to in sub-clause (ii) and sub-clause (iii) of clause (a) of sub-section (1).

(7) The income referred to in clause (b) of sub-section (1) shall be included in the total income of—

(a) the parent who is the guardian of the minor child; or

(b) the parent whose total income (excluding the income referred to in that clause) is higher, if both the parents are guardians of the child.

(8) Where any income referred to in clause (b) of sub-section (1) is once included in the total income of a parent, any such income arising in the succeeding year shall not be included in the total income of the other parent, unless the Deputy Commissioner of Taxes considers it necessary to do so after giving an opportunity of being heard to the other parent.

(9) In this section, ―property‖ includes any interest in property whether movable or immovable, the sale proceeds of such property, in whichever form and where the property, is converted into any other form of property by any method, such other property.

13. Income not included in the total income.-

Subject to the provisions of this Code, the total income of a tax year of a person shall not include the income enumerated in the Eighth Schedule.

Chapter III Computation of income

Part A Heads of income 14. Heads of income.-

Save as otherwise provided in this Code, all incomes shall, for the purpose of charge of income tax and computation of total income, be classified and computed under the following heads of income, namely:-

(a) Salaries;

(b) Income from house property; (c) Agricultural income;

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(e) Capital gains;

(f) Income from other sources.

Part B Salaries 15. Salaries.-

A salary received by an employee in a tax year, other than salary that is exempt from tax under this Code, shall be chargeable to tax for that year under the head 'salaries'.

16. Meaning and scope of salary.-

(1) Salary means any amount received by an employee from any employment whether of a revenue or capital nature, including-

(a) any pay, wages or other remuneration provided to an employee, including leave pay in cash or kind, payment in lieu of leave, overtime payment, bonus, commission, fees, honourarium, consultant fee, ex-gratia or work condition supplements;

(b) any perquisite, whether convertible to money or not;

(c) the amount of any allowance provided by an employer to an employee including a cost of living, subsistence, rent, utilities, education, entertainment or travel allowance, but shall not include any allowance solely expended in the performance of the employee's duties of employment; (d) the amount of any expenditure incurred by an employee that is paid or

reimbursed by the employer, other than expenditure incurred on behalf of the employer in the performance of the employee's duties of employment; (e) the amount of any profits in lieu of, or in additional to, salary or wages,

including any amount received-

(i) as consideration for a person's agreement to enter into employment relationship;

(ii) as consideration for an employee's agreement to any conditions of employment or any changes to the employee's conditions of employment;

(iii) on termination of employment, whether paid voluntarily or under an agreement, including any compensation for redundancy or loss of employment and golden handshake payments;

(iv) from a provident or other fund, to the extent to which the amount is not a repayment of contributions made by the employee was not entitled to a deduction; and

The Direct Taxes Code, 2012